Hormel Foods’ “transform and modernize” turnaround plan appears to be gaining traction, as the food manufacturing giant reported strong Q2 results on Thursday.
The positive earnings report gave the company a 12.55% boost to its stock price, which ended May 28 at $23.59 per share.
It was the sixth consecutive quarter of organic top-line growth for Hormel, according to Jeff Ettinger, interim chief executive officer.
“This was an excellent quarter and gives us even greater confidence in our ability to deliver our full-year outlook,” he said.
Hormel is nearing the end of a three-year modernization plan that includes 90 separate projects, including upgrading its global supply chain.
“Our teams are executing at a high level across the organization, driving impressive performance from our protein-centric portfolio,” said Hormel President John Ghingo. “Each segment delivered both net sales and segment profit growth in the second quarter, reflecting broad-based strength across the business and the impact of our strategy. We are encouraged by our results and confident in how the business is performing.”
The Austin, Minn.-based maker of popular brands such as Skippy, SPAM, Corn Nuts and Applegate beat Wall Street consensus estimates, reporting earnings of 40 cents per share on revenue of $2.97 billion, according to Earnings Whispers. Analysts pegged the quarter at 35 cents per share on revenue of $2.94 billion.
Retail growth
Hormel enjoyed modest 1% organic net sales growth for the quarter year over year, with key growth in valued-added poultry. Jennie-O and Applegate brands benefited from the demand for lean protein-forward products, Ghingo said.
Jennie-O reported double-digit dollar sales growth for the quarter, while Applegate reported strong growth in frozen breaded chicken and chicken breakfast sausage, he said.
Mexican brand Herdez also showed strong growth in Q2, Ghingo noted.
“The salsa portfolio delivered encouraging dollar and volume consumption growth in the quarter,” he said. “And we are extending this authentic Mexican brand into new occasions through entrees, marinades and seasoning solutions.”
Pepperoni a winner
Pepperoni was a top-performing product for the food manufacturer’s foodservice business in Q2, Ghingo said, noting the company’s broad portfolio of pepperoni offerings “spanning traditional to artisanal and mainstream to premium.”
“At this year’s International Pizza Expo, our team launched new Calabrian chili pizza toppings, reflecting our ability to stay close to emerging trends that will help drive traffic,” he said. “We believe this kind of innovative and anticipatory mindset will continue to propel our foodservice segment. Simply put, in Q2, the foodservice segment again performed at a very high level.”
SPAM a lot
Hormel’s SPAM remained a strong brand for the company in Q2, particularly in China, Ghingo said.
“China remained a driver, supported by strong demand and the success of our localized strategy,” Ghingo said. “Our branded export business, led by our SPAM brand also performed well once again, reflecting global demand and the strength of our portfolio. These results are the outcome of focused execution, disciplined investment of resources and a clear strategy to grow in the right markets with the right brands and products.”
